Business Communication

Analyze the accounts impacted and / or accounting guidelines violated and the resulting impact to the business operation.

According to generally accepted accounting principles (GAAP), rises in earnings

must be equaled to increases in net assets always, so that shareholders’ equity

moves forward appropriately and the balance sheet balances. That was the reason that the SEC suspected why HealthSouth was able to increase its earnings while balancing its books by overstating assets and understating liabilities. This was prepared in a variety of methods, but certain accounts were operated most frequently in connection with the fraudulent reporting. If HealthSouth was continues to do so, the way to operate the business will be more difficult. Because of the previous data that the company has is unsuitable to predict the future trend of the company. Moreover, forecasting the future number will be incorrect because the data in their records are wrong.

As a CFO, recommend which measures could have been taken to prevent this ethical breach and how each measure should be implemented in the future.

As a CFO, there are many ways to prevent the ethical breach to not happen within the company in the future. First, the most basic but important thing is being a model of the behavior you wish to see because your staff will see how you act and they will act the same way as you do. If you say but act different from what you do, no one will focus on you in the future and ignore to watch you as their model. For example, doing with the account number faithfully and straightforward. Then in the future you can measure the result from observes your staff behavior.

In additional, you should focus on the issue not the person. No matter anyone ask yourself or command your subordinate to do something unethical, you have to